If you are looking for a new way to save for retirement, you may want to consider an annuity. Annuities can be a great way to ensure that you have a steady stream of income in retirement. However, it is important to understand new money rates in annuities before you make a decision. In this guide, we will discuss new money rates and how they may impact your financial future.
What Are New Money Rates?
In the long run, whether an insurance company credits interest based on a portfolio rate or a new money rate is likely to make little difference. The new money rate, on the other hand, is typically more immediately responsive to interest rate changes in the economy.
An insurer’s interest-crediting rate is based on the investment assets available on the date the annuity is purchased, according to a new money rate. The insurance company adjusts future interest-crediting rates based on the success of those identified assets.